Wednesday, October 9, 2013

Rich and crazy in Congress

Any normal person would be aghast at Congress' shutdown of the federal government that is causing needless pain to many citizens already. The state stops giving vouchers to women for baby formula for their kids? Families of U.S. military veterans who've died in combat can't get death benefits? Hundreds of thousands of federal workers going without pay? What are our elected representatives thinking?

Well, North Carolina's own Richard Burr is apparently thinking things aren't going  that bad. Forget about those wrenching hardships on regular citizens that shuttered government is already causing. Burr was quoted in the New York Times this morning as being ready to test defaulting on the government's debt too. 

According to the Times, Sen. Burr isn't buying the warnings that a default on U.S. debt  from not raising the debt ceiling would do great harm to the U.S. economy or more expansively to global economic activity. Said Burr: "We always have enough money to pay our debt service... You've had the federal government out of work for close to two weeks; that's about $24 billion a month. Every month, you have enough saved in salaries alone that you're covering three-fifths, four-fifths of the total debt service, about $35 billion a month. That's manageable for some time."

So it looks like Burr is counting on a continuing shutdown of the federal government to alleviate the need to raise the debt ceiling - an increase needed to pay for debts he and his cronies have already incurred for services and programs they approved in the past. That's right. While politicos try to pin this budget battle on future spending - particularly any spending associated with the Affordable Care Act - the debt ceiling needs to be raised to cover debts already on the books. Congress is essentially saying they either want to shaft a lot of Americans - hardworking Americans, some of whose family members paid the ultimate price for our security - or want the government to be a deadbeat - a scoundrel who walks away from financial obligations they've already incurred. This is a position of integrity? This is the reputation Americans want? Really?

But back to members of Congress thinking it's OK to flirt with financial disaster of epic proportions. It sounds crazy to us regular folks. Congress members already know things wouldn't be hunky dory. When members came close to not raising the ceiling in another fit of pique a couple of years ago, the financial markets felt it. People lost money. We're only now getting back to where we once were financially.

That doesn't seem to matter so much to the people representing us. And here might be one reason why:  A lot of them are rich. In fact, a lot of them are very rich. The nonprofit Center for Responsive Politics earlier this year unveiled a database showing the median estimated net worth of Congress is $966,000. By contrast, the median net worth of the typical American household is slightly more than $66,000. Ten members had a net worth greater than $100 million.

Losses in the last needless game of chicken over the debt ceiling was negligible to the rich in Congress. Just as the effects of the continuing government shut down is. They're not feeling the pain like other Americans are. Even their jumping on the bandwagon to accept no pay during the shutdown is having negligible impact. According to the Washington Post, at least 232 members of the House and Senate had vowed they plan to donate, refuse or hold in escrow compensation earned over the course of the impasse. (The count includes a few members who already donate their salary to charity.)

At least seven members of the North Carolina delegation have agreed not to take pay. All but one - Sen. Kay Hagan - were Republicans including Mecklenburg's U.S. Rep. Robert Pittenger listed by the Post as the 20th richest in Congress with $17.1 million in wealth. (Tops on the list of Congress' rich members is California's GOP Rep. Darrell Issa at $355.4 million, who already donates his salary to charity.) Burr's wealth was listed as $1.58 million in 2011, putting him among the top 50 in wealth in Congress.

With so much wealth in Congress, most won't miss the money - and those who will aren't likely giving it up entirely. They'll get it back when members reach some accommodation with each other. They've put their money in escrow during the shutdown. For the rest of us, we'll be left to pick up the pieces of whatever financial fallout we incur. Lawmakers should be ashamed to put their fellow Americans needlessly in this position. Normal people would be. But then again, this is Congress.  

-- Fannie Flono



Garth Vader said...

Fannie et al,

You really need to stop this lie about "defaulting on debt". The definition of "debt default" is the failure to keep current with scheduled principal and interest payments.

The government is taking in record revenue ($2.48 trillion for the trailing twelve months ending August 2013). This is more than enough to cover principal and interest payments on the national debt.

Will some programs need to be cut? Absolutely, because any additional deficit spending results in a higher national debt figure, which means that more money would be needed to keep those P&I payments current.

Furthermore, current deficits are being financed solely by the printing of money by the Federal Reserve ($85 billion a month), which is producing inflation evident at the gas pump and the grocery store. Particularly hard-hit by inflation are senior citizens on fixed incomes and low-to-middle class workers struggling to make ends meet.

Meanwhile, the money the Fed prints goes not directly to the government but is first laundered through the network of Primary Dealers - investment banks like JPMorgan and Goldman Sachs, who buy Treasury debt instruments only to flip them (at a profit and with a sales commission) to the Fed. Why do you favor millions in profits for Wall Street but a lower standard of living for the elderly and the poor?

Fannie, I know you never respond to comments here but I think you need to make an exception here to acknowledge your error on "debt default" and that you understand my explanation of how deficit spending is being financed at the expense of our most vulnerable citizens.

Edward Martin said...

No story about the debt ceiling should appear without the following information.

Raising the debt ceiling is not new. It was raised 18 times during the two administrations of Ronald Reagan, who also tripled the national debt. If the national debt had increased at the same rate under Barack Obama, it would now exceed $50 trillion, not $17 trillion, though Republicans under Reagan and until now, repeatedly argued that national debt was not a concern.

The debt ceiling was raised eight times under Bill Clinton; seven times under George W. Bush, and, to date, has been raised three times under Barack Obama.

Any reader with a modicum of objectivity can draw his own conclusions about who's responsible for the wild-eyed, insane partisanship we now see wrecking this country.

CarolinaDrums said...

and, any reader with half-a- brain and any level of objectivity knows full well that ANY and ALL raises of the debt ceiling have come about with negotiation and compromise...from ALL sides - not just one....

Because we want it said...

You know what this simple person thinks. There is no reason for Government employees should not feel the pain that Main-street has been feeling for years. Meanwhile the people in cushy government jobs were protected and didn't feel the pain.

I do feel bad for the Military families, but other than that, I don't give a tinkers dam what happens.

Shut it all down. Reset the entire government.

Call for the immediate recall of very politician in site and fire them all.

Let's start over.

Who cares.

Garth Vader said...
This comment has been removed by the author.
Aubrey Moore said...

The deficit has decreased 60% during Obama's time in office. It is on a fast downward track, something no recent Republican president could claim at any time in their tenures, but both Democrats can.

All this has happened while we are at an eighty year low in the percentage of the GNP that the federal government exacts in taxes. We are losing our middle class and our infrastructure in going to pot. The class warfare thing has ended and the wealthy have won to the extent that our government is rightfully being called an Oligarchy, very similar to present day Russia.

Wiley Coyote said...

Then why didn't you put Hagan's picture up there and eviscerate her?

By the way, Democrats hold 7 of the Top 10 Richest people in Congress.

Fannie, as usual is so blatantly biased it's sickening.

Because we want it said...

@Aubrey Moore

You make a good elementary point. The appearance of a reduction in the spending is a direct correlation as to how much the government has been blasting away in benefits over the past 5 years with the Great Recession.

Now that there has been some what of a correction and the amount of income the government collects, since small business and other silos of commerce are starting to turn around.

This does not mean that your blunderer in Chief is doing a great job, it just means we have stopped the astronomical spending and the private sector is starting to make more money which in turn cause from taxes to be collected. And Moron in Charge can claim credit for it.

Garth Vader said...


It looks like Moody's Rating Service agrees with me that you and the Washington establishment (i.e. leaders in both parties) are wrong to use the word "default":

In a memo dated Oct. 7, Moody’s said: “We believe the government would continue to pay interest and principal on its debt even in the event that the debt limit is not raised, leaving its creditworthiness intact. The debt limit restricts government expenditures to the amount of its incoming revenues; it does not prohibit the government from servicing its debt. There is no direct connection between the debt limit (actually the exhaustion of the Treasury’s extraordinary measures to raise funds) and a default.”

Shamash said...
This comment has been removed by the author.
Shamash said...

Perhaps the "rich" aren't as stupid about money as you think.

They know a scare tactic when they see one.

So to put it in simple terms even a WIC recipient can understand...

When faced with a "debt limit" on your maxed-out credit cards:

Do you choose:

A) Pay your rent.
B) Lease a new car.

No one is FORCING anyone out of their home if they decide to lease a BMW instead of pay their rent.

They are a victim of their own stupidity for making the wrong choice.

Same here.

No one is forcing anyone to NOT service US Treasury bonds or bills, there are other ways to cut the debt.

Only a fool would choose to default on Treasury obligations over the many other choices available to them.

But maybe that's what Obama thinks everyone else is.

kantstanzya said...

One thing that struck me about Ms. Flono's typical class warfare rant is her convenient omission that most of the wealthy Republican, like Richard Burr,earned their money instead of inheriting it like a Ted Kennedy or marrying into it like a John Kerry or a Nancy Pelosi. They understand economics, staying within your means and the dangers of out of control debt. The Democrats understand pandering for votes of Paul regardless of the long term consequences of the Peter's paying the bills.

The United States is now taking in record revenues. But still we cannot keep up with Obama's spending and vote buying operation. He is rapidly creating a nation of dependents....dependent on voting Democratic.

If the debt limit is not raised, like Senators Barack Obama and Harry Reid voted not to do in 2006,the U.S. cam easily service the debt. They will just have to prioritize other spending.They are doing the same thing now with the current shutdown. They somehow found the money to have the Park Service open up the National Mall and staff it with police to stage a "made for media" event for thousands of illegal aliens while keeping the war memorials closed so authentic American veteran heroes cannot visit them.It's all a political game to these people.

I do agree with Ms. Flono, however, that it would be helpful if members of congress felt some of the pain the average American does by the actions of government. Maybe we can start off by eliminating the waivers the Democrats are so carefully protecting so legislators and their staff are not subjected to the same Obamacare the rest of America will be? And we can follow that up with Mr. Obama stopping his opposition to vouchers in Washington DC so that poor minority children can have the same opportunity to escape the failing public schools that his own priviledged children have.

While there are exceptions it is the Republican ranks of Congress that are filled with business people who understand economics and job creation and doctors who understand the problems of socialized medicine and Obamacare. It is the Democratic ranks of Congress that are over represented with lawyers, community organizers and professional politicians who know nothing but feeding off the coffers of expanding government.

Adolf said...

First, someone with a net worth of $966,000 is not "rich" by any stretch of the imagination. That money in a retirement account would barely produce $50,000 a year in income for life. This is a quite common retirement nest egg.

That trivia aside, I agree 100% with the article's theme. It's reprehensible to have an attitude that we can pay our debts if we just stop giving people assistance... without a vote. Bad as it would be to default, I would rather give owners of T-bills the shaft, than poor people on government assistance.

It won't come to that because the level headed people in charge outnumber the right-wing wackos from NC.

bobcat99 said...

I thought Burr would fall in line with the tea baggers at some point. Enjoy your dunking!

deepenwide said...

Shamash the only fool here is you. Your comment about the "WIC recipients" intelligence is despicable.
It really does not matter what Obama does. You and your cronies will tack the opposite way. Your kind is tearing this country apart. If you had the ability to see one inch into the future you would realize what a fool you are.
It is my hope that the day comes when you will need help just to survive. Maybe you will find a modicum of humility in your heart one day but I'm not holding my breath.

Ghoul said...

I thought for sure Taylor batten would write this editorial, but I guess he is busy picking out new drapes for his $1.1 million dollar house.

CharlotteObserver said...

Socialism, for those times when you just don't want to take care of yourself anymore.

Shamash said...

"It is my hope that the day comes when you will need help just to survive."

Why, you old liberal community organizer, you!

Yes, that is about the only hope you have.

Keep that hope alive.

But don't hold your breath waiting for that to happen anytime soon, though.

I guess you just think that the typical WIC recipients are among our best and brightest financial minds.

And I think not.

And for that, you'd like to see me suffer, eh?

Well, isn't that special?

Not gonna happen, not at this juncture.

Shamash said...


I agree with you that of $966,000 is not "rich" by any stretch of the imagination, but since we're talking about "net worth", it could include a house worth several hundred thousand dollars as well, leaving MUCH LESS to generate income through investments.

Of course, to many, a million dollars net worth seems well beyond the reach of most normal humans.

But I'll bet it isn't too far out of reach for those who run the Charlotte Observer, provided they know how to manage their finances.

And whatever our druthers, there is a pecking order of debt for our gubmint.

The Constitution protects our treasury debt, but not necessarily our "public assistance" programs.

Check out the 14th Amendment.

That is not likely to be taken too lightly by either side without some serious political consequences.

Impeachment anyone?

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